The Cullman County Board of Education's Section 16 property is seen here in red, with the recent land purchases made by the board in green, according to Cullman County revenue records. County Road 204 is shown in orange. An unpaved road that runs through the Section 16 is shown in blue.

Editor’s note: On Tuesday Dr. Craig Ross refuted a statement in this story by Alabama State auditor Jim Zeigler claiming the auditor was investigating the legality of lake property purchase by the county board of education. When contacted by The Times Tuesday evening, Zeigler said he is looking into the purchase as a concerned Alabama taxpayer, outside of his official capacity as state auditor. Click here for a follow up to this story.

Alabama State Auditor Jim Zeigler announced Monday he has launched an initial investigation into the Cullman County Board of Education’s $1.2 million purchase of land, including a house, on Smith Lake.

Zeigler made the announcement on his Facebook page and asked anyone with information about the purchase to contact him at Jim.Zeigler@auditor.alabama.gov. Zeigler told The Cullman Times the investigation is in the preliminary stages, and he initiated it after receiving complaints from seven Cullman County residents.

The board paid $1.2 million to Carthage Family, LLC. for 10 acres of property connected to the Greek Estates Subdivision, which adjoins the system’s 435 acres of Section 16 property acquired in a 2012 vote that allowed the school board to take over control of the land that was set aside for “school use” decades ago. The property also includes a large home, which officials say is unfinished and has been empty for some time.

County revenue records show Cullman residents Steven and Melissa Fuller owned the property before transferring it to the Carthage Family, LLC.

School board president Jason Speegle said he was not aware of the investigation Monday and had no further comment on the matter. Superintendent Dr. Craig Ross did not return a call for comment Monday.

School officials said the property is valued at $1.8 million market value, though no official appraisal was ever filed on the land. County revenue records show the newly-acquired land with the lake house was appraised at $960,400 in 2014.

According to schools officials, the 10-acre lot provides easement and right of way access to the system’s existing 435 acres of Section 16 property. Officials have said it should prove useful to have right of way access once the land is eventually utilized. The purchase also avoids any future concerns about the board having to provide right of way access through its existing property for a potential future landowner.

An unpaved road runs through the board’s Section 16 land to the newly acquired tract from County Road 204, however it is not a public road, Revenue Commissioner Barry Willingham said. It wasn’t clear Monday who controlled access to the unpaved road.

The purchase was originally approved following an executive session at a November 2014 board meeting, listed as the purchase of “property for an easement and right of way to Section 16 property.”

The bulk of the funds used to purchase the property came from the general fund, along with some monies generated by timber sales on a separate piece of Section 16 land. A loan is being processed for the purchase and it will soon be moved into debt service. Officials clarified no half-cent sales tax revenue was used for the purchase.

School officials say the property will pay dividends once they eventually sell several hundred acres of lake front Section 16 real estate the system already controls.

“A large part of what we have was basically landlocked, and the property we purchased will provide access to it,” Speegle told The Times in an interview last week. “We tried to purchase just the one piece of property we needed and could not. In order to make the $30-50 million worth of property we have valuable, we had to have that piece of property.”

Speegle said the board currently has no plans for the house that was included in the property.

“That house was probably worth about $750,000, but it probably needs about $300,000 of work to make it a livable lake house,” he said. “We have no plans to do anything with the house.”

Ross issued two statements last week defending the board’s purchase of the new land and touted the financial opportunities it presented the school system by increasing the value of the Section 16 property once it is eventually sold for development.

“The section 16 Smith Lake property has been estimated to be worth multi-millions of dollars. The easement, access, and right of way issues with the land would make it just about impossible to sell or lease,” he wrote March 4. “The positive impact that could come to Cullman County Schools from the sale or lease of this property is incredible.”

When the Section 16 plan was conceived in 2010 by former superintendent Billy Coleman, the board adopted a plan for 90 percent of the eventual revenue to be deposited into a trust account in Cullman County, with 10 percent deposited into the school system’s general fund.

Any long-term financial gains for both local school systems — the county schools and Cullman City Schools — will come from interest earned on the remaining 90 percent. Interest payments will be distributed annually based on the number of students residing within the boundaries of each system. Current estimates would call for the county to receive 83 percent, with 17 percent going to the city system.